SimsBlog

Start-Up Visit: Claystone Inc.

Recently, I had the pleasure of visiting the offices of a Canadian rarity – a digital start-up aimed at the consumer market, rather than the B2B market.

Claystone Inc. is a dynamic home screen launcher and media player application for Android that replaces an Android device’s entire interface. 

What’s cool about Claystone is that it gives users the ability to create “content stacks” where you can queue up content such as news feeds, social media feeds, videos, photos, games, etc for a fast and seamless viewing experience.

CEO Christian Lassonde says that Claystone helps you get more done on the home screen and spend less time switching between apps. 

I’ll say. 

The first thing you notice is how lightening fast it is.  I could barely keep up during a demo as Lassonde zipped from news story to video to Twitter feed all on the home screen, all without opening a single app. 

You can even organize your stacks into categories of your choosing.  For example, you could have a stack for business news, one for sports, one for TV shows, another for games even contacts can be stacked up on your home screen for easy access.  The content in the stacks can be saved for later viewing, even offline.

Very cool.

Android’s multi-tasking ability is one of the big feature wins over iOS.  It’s easy to see that as our digital lives become increasingly mobile, a fast, flexible time saving interface will become important. 

Though Android does offer more flexibility, it's a double edged sword as the phones can seem overly complex, particularly to newcomers.  This could be reflected in Claystone’s 3.7 out of 5 rating in the Android market and is why Claystone’s mantra has become simplify, simplify, simplify.  One innovative way that they are achieving this is by adding game-like elements to the user experience.  New functionality will be enabled only as users master the initial features.

At 37, Lassonde is already a veteran entrepreneur.  A Toronto native, he spent 10 years in San Francisco where following a stint at Second Life, he launched digital ad agency Millions of Us and continues to serve as a co-founder and board member at virtual eCommerce business Virtual Greats.

After returning to Toronto in April 2010 (so that he and his wife could raise their two children closer to family), it didn’t take Lassonde long to meet up with two of Claystone’s founders Dale Darling and Prasad Maruvada.  After some initial consulting work, they soon asked him to become the company’s CEO.

The business model remains somewhat vague.  The app itself is free, so the Claystone team needs to be creative in determining alternate revenue sources.   What has been clearly established is that users do not want to see ads on the home screen of their phone.  It’s more likely that revenue will come from paid content in the form of affiliate deals with video and other content providers.  In the meantime, Claystone design themes are available for purchase in the Android app store.

Perhaps the most surprising thing about Claystone is its very international user base.  A full 25% of users are Chinese, 25% are American and the app is also popular in India, Italy, Germany, France, the UK and many other countries. 

Claystone is proving that Canadians can produce great B2C digital products.  So why is there still a relative dearth of Canadian B2C start-ups?

It all comes down to funding.  To get a good feel for the state of the Canadian VC scene, one only needs visit the website of the Canadian Venture Capital and Private Equity Association.  So boring…so unhelpful…snore.

The truth is Canadian VC’s tend to be conservative and are fond of smaller bets (in the $100K to $500K range) in support of early stage start-ups, and lots of them.  And it seems this trend is picking up steam: 134 Canadian companies were financed in Q2 of this year, an increase of 11% over the same period last year, but the total value of those investments dropped from $355 million to $328 million.

This focus on early-stage ventures while avoiding larger investments aimed at making big, global scale plays aimed at the consumer market could hurt Canada’s tech scene in the long run.  As Mark Evans recently blogged on StartUpNorth, it doesn’t lead to the creation of a vibrant tech culture with hundreds of new tech-related jobs.  Instead, most often, Canadian start-ups are purchased by US companies and the business and its founders move south, further draining the small entrepreneur culture we do have.

I think it’s worth keeping an eye on Claystone.  I hope they’re a big Canadian success story.

 

9 Things: My Keynote to the ACNA

The start-up world has kept me hopping these past few weeks and I've been a very bad blogger.  Time to get posting again!  And I'm starting with the keynote presentation I delivered to the Atlantic Community Newspaper Association on May 13th.

Slide-by-slide commentary is below the SlideShare.

 

Judy Sims ACNA Keynote Presentation

View more presentations from Judy Sims.

1. Title

2. My name is Judy Sims and my day-job is as the COO of a Toronto Internet start-up called CanSport LIVE where I’m busy revolutionizing the business of amateur sports.

3. But up until 2009, I worked at the Toronto Star where as VP Digital media, I was responsible for thestar.com and also launched 4 digital products in 2 years.  Though my day-job is no longer in the newspaper industry, I keep a toe in the water as a member of the PostMedia Digital Board of Advisors.   I’m going to set the stage for our conversation today with a few slides on the new economics of media.  My apologies, there will be some charts and graphs, but I’m a nerd and I can’t help myself.  But the truth is, I find that talking in scientific terms, rather than emotional ones is the most effective way to begin discussing change.

4. What we’ve seen happening over the past 15 years is a fundamental shift in the way the economics of media work.  The root of that shift is the move from a world where media content was relatively scarce to one where content is very abundant.  The barriers to entry are down and anyone can become a publisher.

5. And not only is there a lot more content available, that content has become “atomized”.  Media is now consumed in smaller and smaller chunks across a wider and wider range of media sources.  The average YouTube video is only 3.5 minutes compared to a 30 to 60 minute TV show.  A blog post is only 3 to 10 paragraphs verses 20 or more in a newspaper or magazine article.  Twitter has reduced this even further to only 140 characters.

6. And now we’re even seeing this happening in the advertising world.  Ads have become unbundled from news.  Flyers are becoming daily deals. 

7. Workopolis, Kijiji, Autotrader, Flyerland, Craigslist – the ads are the content.  They’re the prime attraction.

8. The result of this atomization is that economics of this new media world are the inverse of the old media world.  Where content was once scarce and attention was abundant. 

9. Now content is abundant and attention is scarce.

10. Okay, here we go with the charts.  The economics of media, like the economics of any product or service are based upon supply and demand.  Where supply is low, demand is high and where demand is low, supply is high.  Where the two curves intersect determines the balanced market – the quantity produced and price it sells for.  This applies to the cost of a newspaper or movie or the cost of advertising.

11. This is what supply and demand for media looked like before the Internet.  Because there were significant barriers to entry as a media company, i.e. you needed a printing press or a TV studio or movie camera, supply was relatively limited and demand was relatively high.  Thus prices were high.  In our case, that meant that we were able to charge high rates to our advertisers.  Looks good doesn’t it?  We could even do a little marketing or increase circulation by moving into a new town or subdivision and we could even grow our demand and increase the price we charge advertisers.  It was awesome.

12. This is Umair Haque.  He’s an Oxford-trained economist who has been studying the impact of the Internet on various industries.  He defines this media 1.0 world as the Age of the Blockbuster.  The blockbuster resulted in very high revenues and profits for media companies for decades.

13. But Media 2.0 changed all that.  Reduced barriers to entry have increased media supply exponentially.  All this new content has made it easier for us to find what we like online so we actually consume more of it, shifting the demand curve out.  Good news right?  Well, the problem is that the demand curve hasn’t shifted out nearly as much as the supply curve.  The result is a hyper-deflation of media prices.

14. And we are in fact seeing this in action in the online world where supply of advertising inventory is much higher than demand.  And, technologies are being created everyday that make the purchase of advertising inventory increasingly efficient and increasingly complex.  As a result, there has been downward pressure on advertising rates both online and offline.

15. Umair Haque believes that we are witnessing the end of the Blockbuster Age

Newspaper Execs: Still Denying, Still Crying and Still Lying to Themselves

A few years ago, I took a course at Harvard Business School where I was privileged to hear Clay Christiansen deliver a lecture on the “Innovator’s Dilemma”.  What struck me was how in case after case, the managers of disrupted businesses repeatedly made decisions that appeared to be sound – they focused on their best customers, reduced costs, etc – but actually hastened their own demise.

The assumption was always that the disrupters were creating cheaper, inferior products and were scraping the bottom of the barrel for the least desirable, poorest, most unreliable customers – and good riddance to them!  I mean, who wants to go in front of a board of directors and say “We’re going to invest millions to offer an inferior product to our worst customers!”

But the thing is, the disrupters always end up improving their quality and efficiency until they are able to offer something equal or better to that of the incumbent.

Sound familiar?

Last fall, I wrote a post about the lies newspaper executives were telling themselves.  The post was born out of the frustration I was experiencing as I watched a group of very smart people repeatedly do remarkably dumb things, killing their businesses in the process.  And now, more than a year later, as these same execs dilly-dally with pay walls and iPad apps, I can only say that things are getting worse, not better.

It seems to me that there are two camps of newspaper executives.

First, is the very small camp epitomized by the Guardian’s editor-in-chief Alan Rusbridger and JRC’s John Paton.  These execs aren’t afraid to face an uncomfortable reality.  The economics of media have changed.  What was once scarce is now abundant.  Large cohesive media products have become unbundled because the bundles no longer make sense.  The mix of news, information, advertising and classifieds were simply the result of an industrial age manufacturing process.  Or as Jay Rosen asserts, every process that is practiced at a newspaper can be traced back to the needs of the printing press.

The first thing a realistic news exec needs to do is understand their disrupter.  And once they understand the Internet, they will know that their survival rests on becoming of the Internet, not merely residing on the Internet. That means becoming a platform.  That means being open. The Internet is not just another content distribution method.  It is social.  It is collaborative.  That means accepting that they are no longer publishers or broadcasters having a one-way “Gutenberg era” conversation with the masses.

Next, a realistic news executive has to admit that they don’t know where the business model is going.  That takes guts.  Especially in the boardroom.

As Rusbridger put it in a recent lecture in Australia:

It's developing so fast, we forget how new it all is. It's totally understandable that those of us with at least one leg in traditional media should be impatient to understand the business model that will enable us magically to transform ourselves into digital businesses and continue to earn the revenues we enjoyed before the invention of the web, never mind the bewildering disruption of web 2.0.

But first we have to understand what we're up against. It is constantly surprising to me how people in positions of influence in the media find it difficult to look outside the frame of their own medium and look at what this animal called social, or open, media does. How it currently behaves, what it is capable of doing in the future.

It takes balls to stand in front of a boardroom of mostly old men (why aren’t Rafat Ali, Mike Arrington, Om Malik et al invited onto mainstream media boards?) and say that the future is still concealed behind a dense fog.

They can’t tell the truth because the truth doesn’t have an obvious business model.  Yet.

So instead, they do the easier thing, appeasing boards with business plans that look good on paper, especially to people who are not of the Internet. 

So along come the steering committees, working committees, pay walls and subscription models and the dream that consumers will be willing to pay for their rarified opinions despite the countless free alternatives.  And along come the $30 million iPad apps that attempt to recreate scarcity by rolling back the clock to when news was a once-a-day occurrence and the public didn’t expect to comment, contribute or find links.

It’s a colossal waste of time.

In the meantime, smart competitors are discovering new holes in the market and new needs to fulfill.  Bloomberg Government, Demand Media (love it or hate it, it’s growing) and Flipboard are all products that could have been created by mainstream media companies.

We are officially in the post-Gutenberg era.  A new kind of thinking is required.  That is where time and money need to be spent.  That’s where the media industry’s best and brightest should be.

One Weekend Was All it Took

My favourite presentation at Toronto’s DemoCamp this afternoon was by the guys at TaskAve.com.

TaskAve is a simple but brilliant web app that combines maps + tasks + alerts.  It allows you to set a mobile alert that will trigger when you are in a particular location.  The alert reminds you of a task that you should do at that location.

In other words, if you keep forgetting to pick up your dry-cleaning when you’re at the mall, you can set an alert that will remind you as soon as you enter the mall - or walk by the drycleaners.  The alert will appear at a distance from the target of your choosing.

There’s even a business model.  If it achieves a decent amount of scale, TaskAve will have loads of location and purchase intent information.  That would be of great interest to retail advertisers.  If Lowes knows that I intend to buy a new faucet at Home Depot, they can send me a special percent off deal on faucets.  Or, Home Depot can send me an add-on deal, perhaps for bathroom tiles or paint.

Love. It.

TaskAve has some potential.  But that’s not what was most impressive about the presentation.  What’s truly jaw-dropping is that TaskAve was created just two weeks ago at an event called Toronto Start Up Weekend.

A group of five, made up of developers, designers, and product and marketing people created TaskAve in about 48 hours.  48 HOURS!  Complete with a monetization plan!

Phenomenal.

Compare that to a newspaper I heard about recently that has been working for over six months on their iPad app.  They have not one, but two committees working on it: a steering committee and a working committee.

Pathetic.

Newspaper executives need to wise up soon and allow real innovation to occur, without committees, from the bottom up.

The barbarians are at the gate.

 

Mobile as an Afterthought

Love this quote from Anil Dash of Six Apart (the folks behind Typepad).

"If you're starting a new website today, you can't afford to think of mobile as an afterthought - it is your most accessible form of content".

Yup.